The credit card strip: how does it work

by Lisa Cardy

PhotoDisc.co.uk

PEOPLE use them everyday. But how does that black strip on the back of credit cards allow us to buy things and is it safe

The strip on the back of a credit card is a magnetic strip, often called a magstripe. The magstripe is made up of tiny iron-based magnetic particles in a plastic-like film. Each particle is really a very tiny bar magnet.

The magstripe can be 'written' because the tiny bar magnets can be magnetised in either a north or south pole direction so that they have to be one or the other. The magnetisation can then be 'read' by 'swiping' the credit card, which provides the necessary motion for the long strip of information to be picked up.

The magstripe is actually split into three tracks, which are understood by a magstripe reader. Each track holds a specific number of characters with defined functions. The characters contain information about you and your account, but they can only be read in a certain order and are encrypted. So, even if someone did hack into the heavily guarded communication lines between banks and retailers they would also have to crack the code before they could use your details fraudulently.

Now for the important bit, spending power. There are three basic methods for determining that your credit card will pay for what you're charging. The old method of using a touch tone phone to dial for permission, a virtual terminal on the internet and, at the moment the most commonly used method, swiping the card.

In this last case information held on the magstripe is picked up by Electronic data capture, EDC. After the card has been swiped the EDC software dials a stored telephone number via a modem to call an 'acquirer'. An acquirer is the technical term for an organization that collects credit authentication requests from retailers and provides a payment guarantee to the them.

When the acquirer company gets the credit card authentication request, it checks the transaction for validity and the record on the magstripe for valid details.

If the cash point won't accept your card it's usually because the magstripe has become damaged or obscured.

Now that you know know how credit card stripes work, is there something else need to understand To ask The AnswerBank just click here.